Abstract

This paper is aimed to assess the relationship between accrual quality balance and accrual quality. Since accrual quality is not directly observable, in the present paper, accrual quality balance (AQB) has been used as a representative of accrual quality. Then the resultant standard deviation from this model has been applied as a dependent variable in another model, and the relationship between this variable with four accrual quality balances have been studied. For the purpose of this study, 71 listed companies in Tehran Stock Exchange, during 2005 to 2009, have been randomly selected and studied. Formulated hypotheses have been tested using a combination of sectional and time-series data, and the software econometric views,(EVIEWS) has been applied to analyze the results. The results have confirmed the relationship between end-year accrual balances and accrual quality; the positive sign for the following coefficients, business accounts and notes receivable, stock, business accounts and notes payable, means that the relationship between end-year accrual balances with accrual quality is a direct relationship.

Key words: Accrual quality, accrual balances.